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TMI Blog2020 (1) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... defendant No.5 and 6. In my opinion, the plaint essentially pleads seriously disputed questions of fact. It is quite clear that such disputed question of fact would not mean that a civil court could assume jurisdiction over such suits. This court would not have jurisdiction to entertain the present suit in view of section 34 of the SARFAESI Act. Suit dismissed. - CS(COMM) NO. 1105 OF 2018 - - - Dated:- 19-8-2019 - Jayant Nath, J. Jaspreet Singh Kapur, Adv. for the Plaintiff. Sanjeev Singh, Adv. for the Defendant. ORDER IA No.14561/2018 1. This application is filed under Order 7 Rule 11 CPC on behalf of defendant No. 1 for rejection of the plaint. 2. The plaintiffs have filed the present suit seeking cancellation of the agreement dated 25.02.2016 executed between the plaintiffs and defendant No.1 for a loan amount of ₹ 3 crores. A permanent and mandatory injunction in favour of the plaintiffs is also sought for return of the original property papers of the property bearing No. 147, Engineers Enclave, Pitampura, Delhi. Other connected reliefs are also sought. 3. The case of the plaintiffs is that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the SHO Economic Offence Wing, New Delhi to register an FIR. The plaintiffs have denied that they signed any document which grants authority to defendant No.1 to credit the loan amount into the bank account of defendants No. 5 and 6. It is pleaded that a perusal of the customers' copy of the loan agreement would show that the plaintiffs signatures have been obtained on various loan papers without having filled in complete necessary information and some columns in the loan agreement have been left in blank. Hence, it is pleaded that the plaintiffs have not availed of any loan facility and are not liable to pay any amount to defendant No. 1. Fraud, cheating and criminal conspiracy amongst the defendants is apparent. It is further pleaded that the property in question that is said to have been mortgaged to defendant No. 1 in Pitampura has a value for more than the outstanding loan amount. Hence, the present suit. 8. Defendant No. 1 has filed the present application under Order 7 Rule 11 CPC. It has been pointed out in the application that there is a statutory bar under Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 13(4) by the secured creditor. An application may be filed before the concerned DRT having jurisdiction. Section 17 (3) provides that the DRT if after examining the facts and circumstances of the case and the evidence produced comes to a conclusion that the measures taken under section 13(4) by the secured creditors are not in accordance with the provisions of the Act and the Rules made thereunder, it may by order declare the steps taken by the secured creditor as invalid and restore possession of the secured assets to the borrower. 13. Section 13(4) and section 17 of the SARFAESI Act, 2002 read as follows: 13(4) In case the borrower fails to discharge his liability in full within the period specified in sub-section (2), the secured creditor may take recourse to one or more of the following measures to recover his secured debt, namely:-- (a) take possession of the secured assets of the borrower including the right to transfer by way of lease, assignment or sale for realising the secured asset; (b) take over the management of the business of the borrower including the right to transfer by way of lease, assignment or sale for realising the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me being.] (2) The Debts Recovery Tribunal shall consider whether any of the measures referred to in sub-section (4) of Section 13 taken by the secured creditor for enforcement of security are in accordance with the provisions of this Act and the rules made thereunder. (3) If, the Debts Recovery Tribunal, after examining the facts and circumstances of the case and evidence produced by the parties, comes to the conclusion that any of the measures referred to in sub-section (4) of Section13, taken by the secured creditor are not in accordance with the provisions of this Act and the rules made thereunder, and require restoration of the management or restoration of possession, of the secured assets to the borrower or other aggrieved person, it may, by order,- (a) declare the recourse to any one or more measures referred to in sub-section (4) of Section 13 taken by the secured creditor as invalid; and (b) restore the possession of secured assets or management of secured assets to the borrower or such other aggrieved person, who has made an application under sub-section (1), as the case may be; and (c) pass such other direction as it may consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1993). 15. It is apparent from the above statutory provisions that any person who is aggrieved by any of the measures taken under section 13(4) by the secured creditors, such person has a remedy before DRT under Section 17 of the Act. Section 34 of the Act states that no civil court shall have jurisdiction to entertain any suit in respect of any matter which a DRT or the Appellate Tribunal is empowered under the Act. 16. The Supreme Court in the case of Mardia Chemicals Ltd. (supra), however, carved out an exception to the jurisdiction of the Civil Court in paragraph 51 as follows: 51. However, to a very limited extent jurisdiction of the civil court can also be invoked, where for example, the action of the secured creditor is alleged to be fraudulent or his claim may be so absurd and untenable which may not require any probe, whatsoever or to say precisely to the extent the scope is permissible to bring an action in the civil court in the cases of English mortgages. 17. However, would the facts of this case as stated in the plaint warrant a conclusion that Section 34 of the SARFAESI Act has no application to these proceedings in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r held that the suit would not be barred by law. 19. However, a Co-ordinate Bench of this court in the case of Neha Aggarwal v. PNB Housing Finance Ltd. 2016 (158) DRJ 286 on a similar plea noted as follows:- 22. The aforesaid exception carved out by the Supreme Court has led to persons interested in defeating the actions of the banks and financial institutions under the SARFAESI Act inundating the civil courts with pleadings to bring their cases within the exception aforesaid. Unless the civil courts, before entertaining any such suits, scrutinize the pleadings in the plaint carefully, the same will result in Section 34 of the SARFAESI Act being rendered illusory and thereby also frustrating the very objective of enactment of SARFAESI Act. Supreme Court in Mardia Chemicals (supra) carved out an exception, if I may humbly so opine, only in respect of claims by a mortgagor of the action of the secured creditor to be fraudulent. Though the Supreme Court chose not to expand as to what facts may qualify for an action of the mortgagee to be called fraudulent, an inkling thereof is evident from the reference therein to the two decisions supra of the Madras High Court. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uit and if finds so, to throw out the plaint as keeping the same pending frustrates the Banks compelling them to agree to one time settlements. 20. Hence, every dispute between the mortgagor and the bank or a third party cannot be taken out from the ambit of Section 34 of the SARFAESI Act. The exception provide in Mardia Chemicals Ltd.'s case (supra) only pertains to a fraudulent act of the secured creditor. 21. The Supreme Court in the case of Bhaurao Dagdu Paralkar v. State of Maharashtra [2005] 7 SCC 605 defined 'fraud' as follows: '10. A fraud is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. (See S.P.Chengalvaraya Naidu v. Jagannath)' 22. In my opinion the facts in this case are not much disputed. The plaintiffs admit to have applied for a loan of ₹ 3 crores and also admits to have given the original title papers of the property in Pitampura as a security for the proposed loan. It is also an admitted fact that from April 2016 till September 2016, six ..... X X X X Extracts X X X X X X X X Extracts X X X X
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